Federal Government Ends 3-Month Restriction on Short-Term Health Insurance
New HHS regulation reverses 2017 Obama rule
Aug 01, 2018, 11:22 ET
MOUNTAIN VIEW, Calif., Aug. 1, 2018 /PRNewswire/ -- The Trump administration has issued a new regulation today that reverses the prior administration's 2017 rule limiting short-term health insurance coverage to less than three months. The new regulation allows each state to assess the needs of its residents and set its own coverage period, with the maximum being less than 12 months. State-specific regulation had been the norm in the short-term health insurance market for its three-decade existence, and the majority of states had allowed a maximum coverage period of 364 days prior to the Obama administration's restriction, which went into effect on April 1, 2017.
Renewals and extensions of short-term policies are capped at 36 months under the new regulation and may be done "without any medical underwriting or experience rating beyond that completed upon the initial sale of the policy."
The new regulation, which goes into effect 60 days after it is published in the Federal Register, will be welcomed by the uninsured as well as millions of existing and former short-term policyholders. The change will also receive an enthusiastic reception from a diverse range of policymakers and industry thought leaders who have championed the elimination of the 2017 regulation. Last year, 14 U.S. senators led by Sen. Ron Johnson asked for the three-month restriction on short-term plans to be rescinded. Other organizations that objected to the three-month rule included the National Association of Insurance Commissioners (NAIC), the National Association of Health Underwriters (NAHU), and the state departments of insurance in Georgia, Illinois, Kansas, Louisiana, Nebraska, Oklahoma, and Wisconsin. HealthPocket submitted a white paper and several comment letters to the Centers for Medicare and Medicaid Services (CMS) documenting the consumer harm caused by the 3-month rule. AgileHealthInsurance.com also submitted formal CMS comments and published industry statistics that dispelled many myths that were mischaracterizing this product and its purchasers.
Under the 2017 Obama restriction, consumers needing temporary coverage would have to reapply for insurance every three months. In practice, this meant that if a person were unemployed for seven months and lost employer health benefits, he or she would need to apply three separate times. Each re-application reset the deductible so that prior medical spending no longer counted. Additionally, any medical condition from the prior three months became uncovered since, as interim coverage used for less than a year, short-term plans' economic model only insures conditions that happen during the policy's duration period. It is expected that most health insurance companies currently selling short term plans will start marketing one-year plans by the new implementation date, and that the new regulation will encourage many highly-respected health insurers to return to the short term market and start selling new one-year plans of their own.
"The short-term regulation issued today by the departments of HHS, IRS, and Labor is extremely pro-consumer and recognizes our country's need for a strong gap health insurance market, particularly in this period of disruption for the Affordable Care Act," said Bruce Telkamp, founder and CEO of AgileHealthInsurance.com and HealthPocket, Inc. "Politics aside, it's beyond debate that scant insurance company participation and ever-increasing premiums for unsubsidized Obamacare plans have pushed millions of consumers out of government health exchanges. One year short-term plans will bring immediate relief to consumers needing low premiums and unrestricted provider network coverage so they will not join the ranks of the uninsured."
For more than 30 years, short-term health insurance has served as the fundamental bridge for individuals and families going through insurance lapses caused by job loss, a change in Medicaid eligibility, college graduation, summer vacation, or retirement before Medicare enrollment. These plans are significantly less expensive than exchange health plans and can be purchased any time of year. Their core benefits range from doctor and specialist visits to hospitalization and emergency care. Their unrestricted network model also provides the maximum breadth of healthcare provider acceptance. Insurance applications are medically underwritten by the insurance company so acceptance is not guaranteed but prior industry analysis has found nearly 90% of applicants were approved for coverage. Additionally, health conditions that arose prior to the beginning of coverage are not paid by the plans.
Kev Coleman, Head of Research & Data at HealthPocket commented, "The enactment of the three-month restriction in 2017 by the Obama administration failed to improve Affordable Care Act enrollment as hoped and, instead, hurt short-term policyholders financially by resetting their deductibles multiple times per year. These multiple resets added thousands in out-of-pocket burdens unnecessarily. The return of short-term products in their traditional form comes at a crucial time since these plans not only provide gap insurance, but also provide a safety net to keep unsubsidized consumers insured when they are priced out of the Obamacare market and lack suitable alternative coverage in their area. The plight of the unsubsidized will become even more challenging in 2019 given that the Congressional Budget Office has predicted a 15 percent premium increase for exchange plans. This increase will only apply to the unsubsidized since subsidized buyers pay a fixed percentage of monthly income. Regarding the potential impact of this increase, a recently published government study found that the 21 percent rise in 2017 Obamacare premiums was met with a 20 percent decline in enrollment among unsubsidized consumers compared to only a three percent enrollment decline among the subsidized."
AgileHealthInsurance.com was launched in 2015 to educate consumers on the availability of private market health insurance products that are alternatives to Affordable Care Act (Obamacare) plans. Today AgileHealthInsurance is the largest distributor of short-term health insurance, providing a fast, online process for purchasing these plans. Short-term health insurance is a flexible and low-cost major medical insurance for individuals without expensive pre-existing health conditions. It is not Obamacare. Short-term health plans offer consumers the flexibility to choose health plans with the benefits that matter most to them and combine these benefits with broad provider networks. Additional information about AgileHealthInsurance can be found at www.AgileHealthInsurance.com.
AgileHealthInsurance is a Silicon Valley-based technology company and an independently managed division of Health Insurance Innovations, Inc. (Nasdaq: HIIQ). AgileHealthInsurance and its executives hold licenses in all 50 states and D.C. to transact health insurance online. This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans and projections regarding new markets, products, services, growth strategies, anticipated trends in our business and anticipated changes and developments in the United States health insurance system and laws. Forward-looking statements are based on our current assumptions, expectations and beliefs are generally identifiable by use of words "may," "might," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or similar expressions and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, among other things, our ability to maintain relationships and develop new relationships with health insurance carriers and distributors, our ability to retain our members, the demand for our products, the amount of commissions paid to us or changes in health insurance plan pricing practices, our ability to integrate our acquisitions, competition, changes and developments in the United States health insurance system and laws, and our ability to adapt to them, the ability to maintain and enhance our name recognition, difficulties arising from acquisitions or other strategic transactions, and our ability to build the necessary infrastructure and processes to maintain effective controls over financial reporting. These and other risk factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements are discussed in HIIQ's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) as well as other documents that may be filed by HIIQ from time to time with the Securities and Exchange Commission, which are available at www.sec.gov. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. You should not rely on any forward-looking statement as representing our views in the future. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
SOURCE AgileHealthInsurance.com